The U.S. District Court for the Central District of California early last month issued orders for final injunctions against two companies and two individuals who had been accused by the Federal Trade Commission of telemarketing paging licenses to potential buyers with the promise that huge profits could be reaped by reselling or leasing those licenses.
As part of its ongoing Project Roadblock, the FTC-in cooperation with state investigation authorities-earlier had shut down USA Channel Systems Inc., Two-Way Systems Inc., Charles Bernard Bayne and Rick Havil following an investigation into their activities. Finding that the companies and their principals “engaged in unfair or deceptive acts or practices … in connection with the offering of application preparation services for Federal Communications Commission paging licenses,” the FTC took action to bar them in the future from the following:
misrepresenting the number of FCC licenses that can be issued in any given geographic area;
promising that such licenses are desirable enough that a waiting list exists for their lease, sale or other means of disposal at a profit;
falsely representing that FCC license ownership automatically translates into a profitable venture;
misrepresenting FCC fees along with the final costs of building and operating a communications business; and
failing to disclose FCC rules regarding the acquisition, ownership and/or sale of licenses and the risks involved.
In addition to these restrictions, Bayne and Havil, who signed away rights to any further litigation in the matter, will continue to be monitored by the FTC regarding their future business activities. Both were assessed personal fines-$65,000 for Havil and $50,000 for Bayne-and both must comply with standard business practices (accountable to the FTC) for at least three years. The fines will be used, in part, to repay investors in the fraudulent paging scheme. The defendant companies also were fined $50,000.
For the next five years, Havil must apprise each officer, manager, director and customer-service agent involved in any telemarketing business of which he is the majority owner and/or manager, of the court case and get written confirmation of their acknowledgment. He also must allow the FTC to access his facilities and records for the next three years, and to interview personnel concerning Havil’s compliance.
In addition, Havil has been enjoined from any further telemarketing or the supervision of other telemarketers unless he can post a $250,000 bond as an “insurance policy” buffering any future consumer complaints filed against him or his affiliates.
Bayne, for the next five years, must keep the FTC informed of his business whereabouts; make sure the company is informed of the court decision; and make his office and co-workers available to the FTC.